Where is the *$@%# money?

The debate rages on. Can portals make money? Which companies will make money from e-commerce? Who will profit from the phenomenal rise of the World Wide Web? We all suspect there is money to be made, in fact some of us are absolutely sure of it. So much so, that much money is being invested in hugely risky ventures. But where is it to be made? That is the trillion-dollar question.

The return on investment for a company with an established market position taking its business to the Web can be astronomical, never mind just profitable.

Some people are still debating the possibility of the whole "Internet thing" collapsing like a house of cards. To them I say, "wake up and smell the roses". We are living through a social revolution, the full effect of which will only be appreciated when we look back in five and ten years time.

Meanwhile, who makes money? If the answer is "no-one", then to be sure investors will have a rude awakening, and there will be a rapid vapourisation of capital from "Internet stocks".

The most obvious answer is the "traditional" companies (eg Dell and Cisco) that are successfully using the Web as a direct selling channel. We all know about these success stories. The return on investment for a company with an established market position taking its business to the Web can be astronomical, never mind just profitable.

We may even know of a few start-ups (companies that did not exist apart from their Web incarnation) that are making money by trading physical goods over the Web. (Amazon is a good example of a company that sells plenty of books but has yet to turn a profit. It does this deliberately, apparently, in order to grow its market share.) But there are others that do make a profit already, if one really looks for them. Perhaps in time they will all make a profit. Perhaps the moon is made of Gorgonzola!

Then there are the mega-portals and ISPs. Why put these two together? Firstly, because they have something in common: they need to be large to have critical mass. Secondly, because increasingly, ISPs and portals are uniting. Or alternatively, they always were vertically integrated - take AOL for instance, perhaps the best example of a profitable Internet company. Interestingly, AOL is yet another example of a company that became successful long before it had a Web presence - or before the Internet even became popular. Is there a lesson here somewhere? Or is there another independent variable driving the whole profitability issue?

Then there are the platform builders. I call them this because they are building the technology platform for the wired marketplace. By "platform" I don`t mean computer hardware. (Isn`t it amazing how many names computer hardware has been given from time to time - who remembers being sold a computer as a "solution" once upon a time?). By platform I refer to all the elements needed, including the network infrastructure, an adequate installed base of servers, devices and users accessing the network, and all the software and services needed to glue everything together. Are these companies making money? Ask Cisco, Dell and Microsoft.

So who is yet to make money? All those in the middle who are trying to extract a buck by building a tollbooth on the information superhighway. There are some exceptions, of course. Some neo-brokers (remember disintermediation - these new companies are putting up Web sites to take the place of brokers and agents of all descriptions) are making money already, but you will have to look far to find them. And chances are they are already either super-large or super-specialised, and probably also were successful entities before establishing a Web presence. Most, however, are hopeful of making a profit some day, despite their extremely rapid growth in user numbers and turnover.

No doubt many will, as the sheer growth in numbers of Internet users pushes them into the magic zone. However, I fear that many more will find a cutthroat competitive environment, with hundreds of other companies implementing the same bright ideas. It's not that the ideas weren't good, it's just that it is so difficult to create and sustain a competitive advantage. Those who do so will probably invest heavily (much of this funding coming from external investors). The question remains as to the true value of these companies, and the ultimate destiny - mega mergers and acquisitions.

Which brings me to the punch-line. Who will definitely make money out of all this? Who always makes money, no matter what happens? Lawyers and deal-brokers, of course!